With consumer confidence up, will consumption follow? | Pete Wargent

Now that Consumer Confidence is on the up – will consumption follow and pull up our economy?

Weekly consumer confidence increased to 114.3 points on the ANZ-Roy Morgan confidence rating to be above the long run average level.

ANZ-ROY morgan weekly consumer confidence rating

Source: Roy Morgan 

As noted the other day, in a speech last week the Reserve Bank considers a recovery will run in the following order:

 “The central bank runs its models using history as a guide, and the Board believes that a recovery will proceed from household expenditure to business investment to labour market conditions, in that order.”

The Roy Morgan index implies that a pick-up in consumption will follow, so it will be interesting to see how the Christmas period track in terms of retail sentiment.

Consumer confidence points to a pick-up in consumption

Our chart packs have shown that New South Wales already has been experiencing boom-like condition in retail over the past year, both in turnover and chain volume measures terms.

However, an economic slowdown in several other states has dulled the overall picture for Australia.

Retail turnover by state

Retail turnover by state 2

Retail by state - chain volumes



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Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog

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